Horkel Divide Growing

France's 'happy' Hollande is out, apres-dejeuner, opining on what occurred today and where he stands. The critical items appear to be the growing divide between his immediate need for 'debt stability' measures versus his disagreement over the assumptive 'fiscal pact' that Merkel will require before any money leaves that nation's shores in its transfer-of-wealth way. Headlines via Bloomberg:

HOLLANDE WITHHOLDS ENDORSEMENT OF EU FISCAL PACT

HOLLANDE SAYS MUST FIND ALTERNATIVE TO ECB IN CUTTING YIELDS

DEBT STABILITY MEASURES NEED TO COME FIRST, HOLLANDE SAYS

HOLLANDE SAYS GROWTH MEASURES `AREN'T ENOUGH'

but its just not fair... sacre bleu...

HOLLANDE SAYS ITALY-SPAIN YIELDS TOO HIGH, GIVEN THEIR EFFORT

BAILOUT FUNDS SHOULD BE USED FOR ITALY-SPAIN, HOLLANDE SAYS

and the piece-de-resistance:

EUROPE SHOULD HAVE MORE THAN MARKET ECONOMY, HOLLANDE SAYS

WE WILL RENEGOTIATE COUNTRY SPECIFIC RECOMMENDATIONS AND WILL ONLY IMPLEMENT WHAT WE AGREE WITH

When we said that the Spanish bailout inspired Syriza to push on with renegotiating all the Greek pacts, little did we know that Syriza itself would inspire all of Europe to gang up on Merkel. Problem is: Syriza failed as Germany sadly still has all the leverage aka money. The other beggars will be no more successful.

The market's response to this less-than-total-print-fest Summit resolution: ES -8 pts from late-day highs... given back well more than half the 'fat-finger' fiasco...

That should count for something, IMHO. But my opinion counts for nothing.

What it does count - is uncertain.

So far the return to Germany's disproportionate productivity is blame - as in "Germany has benefited most from the Euro" - as justification for why they should pay up, guilty as they are of "merchantilism" and whatnot.

I'm not trying to articulate what should be. The root comment above described one outcome of the application of force and violence to the situation. I'm just trying to establish some context.

More than market.In addition to marketAn extension of marketPast marketLike outside the confine of marketLike non marketLike gubamint marketLike gubamint aidedGubamint helped along by the amazing technocratsLike ensured that the market is of benefit to all, helped along and molded by the Amazing TechnocratsLike a second parallel Amazing Technocrat designed alternative to the marketFunded by that suspicious market, for the benefit of the People who we, The Amazing Technocrats care for.The Amazing Technocrat Economy, funded by the evil fucking speculators in the market economyThat we're gonna wipe off the face of the earthAnd once we do, everybody will see just how Fucking Great We The Amazing Technocrats Are with our Amazing technocrat MarketAnd we'll call it United Europe, United Under the New World OrderThe European Union Part II all over again!Where everything is fair and liberal.Socialista via socialismVive Brussels and the TechnocratsLong Live Europe

Europe already does have "more" than market economy, with lots of societal and financial socialism and fascism, so that makes this statement more sinister, suggesting he actually means "other" than market economy.

Germany may come out and say Nein to everything and possibly one up the chicken play by saying if we continue down this path Germany may decided to leave the EU (they won't say currency but it will be implied). And the ball will be in Spain and Italy and France's (US also) court.

Don't worry. None of these politicians wants the show to come to an abrupt ending. They will compromise by allowing an initial amount of Eurobonds to be issued as a down payment on some progress being made for fiscal unity and all that other motherhood crap.

Yep, miss a payment on Visa and you'll pay 24%....but 6.8% is called by the FT "extortionate"? Think we have to keep paying attention to this whole Europe kerfluffle. 24% lending used to land banks in jail in the US. 9% would often do it. There was a good reason.

If I can contribute a small suggestion: this is the *general* point. No one wants a real market. Socialists want unfundable services and goods first, then for the market to figure out how to afford it. Financial institutions want the leeway to "keep up" with speculative activities that totter over the real economy, and wants the government to figure out how to manage *that*.

Everyone is trying to get something, and have the system adjust to give it to them.

But that is not how reality works best. Plans adjust to reality is best; trying to make reality adjust to plans creates the multi-train wreck we are in today, in which no one's hands a reclean. Transcende the left-right dichotomoy, grashopper: the problem is endemic, not partisan.

Merkel and Hollande had a private meeting at the Elysee Palace yesterday. Merkel should return the favor and invite Hollande to meet with her at Dachau so she can 'reset' the Franco-German relationship.

I can see it all now.Marching with their hands on their heads, towing pull carts full of food and beverages, piled high with white linen table cloths and napkins, fine china, crystal and silver ware. Whilst the German troopies pay no attention being entertained by Dita Von Teese shimmying and shaking in her burlesque routine a la Berlin, 1928.Ah, the good olde twisted days.

We should all follow Angies logic to its final conclusion - national units of account as the Germans don't hold money , they hold claims on wealth that they exported but domestic elites of each country like to hold German money units for some reason.

True enough but what does Germany gain by shipping more Mercedes and Porsches to Greece or Spain in return for promises they will be paid for... IF Germany loans them the money. Germany may have to look to the east and overseas for its markets as the PIIGS, with perhaps the small exception of Ireland and perhaps Italy, look to be goners.

Diesel use is a signal of commercial activity , construction etc…….From the IEATotal “Oil demand in Italy fell even more sharply , down a staggering 14.9 % in April to 1.2mbd as the dire economic backdrop quelled consumption”

There is not goods substitution happening to these countries as happens to national currencies when they print - these countries are simply running out of tokens to buy anything !!

In the UK people have the tokens to buy a rail or bus ticket but in Europe proper things have come to a sudden stop.

ACEA june 28“Brussels, 28/06/2012- In May, new commercial vehicle registrations continued the downward trend commenced in January, facing the sharpest decrease since 2009 (-17.8%, compared to May 2011). The UK was the only market to post growth in the month (+10.0%), while Germany (-13.6%), France (-22.1%), Spain (-27.4%) and Italy (-42.4%) all recorded double-digit downturns. From January to May, the EU* market shrank by 11.8%, compared to the first five months of 2011. The decline ranged from -4.0% in Germany to -6.2% in the UK, -8.5% in France, -24.8% in Spain and -37.9% in Italy. In total, 735,993 new vehicles were recorded throughout the period”

The Bus market is the most interesting segment from my point of view with the UK keeping the entire European market from collapsing once again (goods substitution ?)

“In May, new bus and coach registrations were down 3.5%, despite the good performance of the British market (+109%), which remained the largest. From January to May, the positive results in the UK (+61.1%) and Germany (+2.6%), the two largest markets, counterbalanced the downturn recorded in France (-18.9%), Italy (-30.9%) and Spain (-42.5%), leading to an overall 3.1% increase of the EU* market.”

If we look at the Jan to May Bus figures the UK market is the equivalent of the French , Italian & Spainish market combined !!

Germany didn't lend it, banks made loans. Investors loaned money against the agreed terms of sovereign bonds. Ah, there's the problem: The Pablos and Marios of the world thought the government was giving them stuff, not lending them stuff. It has been political fraud all the way. "We have arranged everything so that our economy will grow and we can tax the growth. Therefore we can give you lots of free stuff." What's the penalty in Spain for murdering dreams, eh?

Oil only has value if you also have machinery and that is what Germany excels at making. Pharmaceuticals also have real value. Without them we'd sink back to medieval population levels quickly. The same plagues and diseases with the exception of small pox are still out there and if we ever have to leave our technological cocoon they will return.

Anything of tangible value is money - it just gets traded before it gets consumed and it continues to be traded regularly from production. Simply some money is easier than other money - more durable (gold) and smaller per purchasing-power (gold) but anything useful is money. Copper, honey, morphine, bricks, if it's got a use in the physical world it's money.

Europe will have to print or default. Banksters, including Bernanke, will only allow printing.

Print up a trillion Euros and give them in proportion of the economies. Germany will get 270 billion, France will get 200 billion, Italy will get 180 billion, Spain will get 120 billion and Greece 35 billion euros.

Since the printing is proportional to the size of the economy, it is a fair way of cutting the cake of a trillion euros. That will address debt issues in peripheral countries but not at the expense of the stronger countries.

Or if they issue Euro bonds, then all countries must participate in proportion to their economy - that is the only fair and equitable way to issue them.

but China is still buying up USD, will cap short squeezes on all markets IMO. Any offers on USD will be bough by India/China. The market is too transfixed on European madness. So I'm thinking, yes some squared positions to lower selling next month. In fact I would lock in a crash (equities)

Germany will 100% refuse a Euro-bond as bunds come under pressure...and of course it's main buyer starts to dry up. China.

maybe I'm tired .... but the heck does "EUROPE SHOULD HAVE MORE THAN MARKET ECONOMY, HOLLANDE SAYS" mean?

If it what I think he issuggesting ... either I am out of touch with today's world or Hollande is going bolshevik. Is this just a variation of the present Mayor of Chicago saying a crisis is too valuable to waste? I.e., Germany and USA are supposed to work our tails off to support the world under Hollande.euro-socialist-UN guidance?

What Hollande is saying is : we should not let the market decide everything for us. I think he is pointing to a social priorities programme whereby the europeans create jobs in areas where GLOBAL market factors are not the only criteria. Classic Keynesian play in infrastrucure programs that are prioritised for european small business and social services. Why this has to be paid by others is beyond me. If nation states build up social priority activites that are culturally specific to that region for creating local jobs, which creates consumption and is not detrimental to the balance of trade where is the problem.

We all need mercantile economies to learn from innovation and to import those things we don't have; but it does not have to be a 100% free global market economy in all countries. Paradigm change, putting people first in some activities may be compatible with modern governance. The PAx Americana model is flawed. Don't lose any sleep over that. The ghost of Marx is not at your doorstep. The ghost of Agamemnon is.